Russian President Vladimir Putin (C) prepares to sign documents as Sergei Naryshkin (R), speaker of the State Duma, Russia's lower parliament house, and Valentina Matviyenko, head of the Federation Council, look on during a ceremony in Moscow's Kremlin March 21, 2014. Putin signed legislation on Friday that completed the process of absorbing Crimea into Russia, defying Western leaders who say the Black Sea peninsula remains part of Ukraine. REUTERS/Sergei Chirikov/Pool (RUSSIA - Tags: POLITICS TPX IMAGES OF THE DAY) - RTR3I1A2 Sergei Chirikov/Reuters
Two signatures Friday on opposite sides of Europe deepened the divide between East and West, as the European Union pulled Ukraine closer into its orbit and Russia formally annexed Crimea.
In this "new post-Cold War order," as the Ukrainian prime minister called it, Ukrainian troops still in Crimea were forced to choose: leave, join the Russian military or demobilize. Ukraine was working on evacuating its outnumbered troops, but some servicemen said they were still awaiting orders.
The chief of the UN came to Kyiv and urged all sides to keep their tempers down.
Many eyes were on Russian President Vladimir Putin's next move, as they have been ever since pro-Western protests drove out Ukraine's president a month ago, angering Russia and plunging Europe into its worst crisis in a generation.
Putin sounded a conciliatory note Friday, almost joking about U.S. and EU sanctions squeezing his inner circle and saying he saw no reason to retaliate — but his government maintained warnings of further action.
Russia's troubled economic outlook may drive its decisions as much as any outside military threat. Stocks sank further Friday and a possible new downgrade loomed. Visa and MasterCard stopped serving two Russian banks and Russia conceded it may scrap plans to tap international markets for money this year.
Despite those clouds, Putin framed Friday's events in victorious colours, ordering fireworks in Moscow and Crimea reminiscent of the fireworks displays when Soviet troops drove the Nazis from occupied cities in World War II.
At the Kremlin, Putin hailed the incorporation of the Black Sea peninsula of Crimea into Russia as a "remarkable event," then finalized it by signing parliament bills into law.
At nearly the same time in a ceremony in Brussels, EU leaders sought to pull the rest of Ukraine westward by signing a political association agreement. This is a highly symbolic piece of paper — part of the very same EU deal that touched off Ukraine's political crisis when President Viktor Yanukovych rejected it in November, igniting months of protests that eventually drove him from power.
Ukrainian Prime Minister Arseniy Yatsenyuk said this deal, and further sanctions against Russia, are necessary to ensure peace.
"Russia decided to actually impose a new post-Cold War order and revise the results of the Second World War," Yatsenyuk said in Brussels. "The best way to contain Russia is to impose real economic leverage over them."
The agreement includes security and defense cooperation, he said, though it is far from full EU membership and doesn't include an important free-trade element yet.
But the EU decided to grant Ukraine financial advantages such as reduced tariffs to boost its ailing economy until the full deal can be signed. Those trade advantages are a blow to Russia, which had hoped to pull Ukraine into a Moscow-focused customs union instead.
In exchange for the EU pact, Ukraine's government is promising economic reforms.
Russia's foreign minister dismissed the EU pact, saying the current Ukrainian leadership lacks popular support and should have held elections before making such a decision.
UN Secretary-General Ban Ki-moon, visiting Ukraine's capital, urged talks between Kyiv and Moscow.
"At times like this, it is vital that all parties refrain from any provocative actions that could exacerbate an already very tense and very volatile situation," he said.
EU announces new sanctions
The EU on Friday added 12 more people to bring its list of those facing visa ban and asset freeze sanctions to 33. According to a document obtained on Friday by the Associated Press, the list included some of Russian officials and lawmakers targeted by the first round of U.S. sanctions Monday.
EU leaders also decided to prepare economic sanctions in case the situation in eastern Ukraine deteriorates further.
On Thursday, U.S. President Barack Obama ordered a second round of sanctions targeting members of Putin's inner circle and a major bank supporting them.
International agencies downgraded Russia's economic outlook, and Russian stocks plummeted Friday.
"The economic impact of the sanctions is already visible — on the stock exchange, the value of the Ruble, the investment climate," EU President Herman Van Rompuy told Belgium's VRT network.
Putin said he sees no immediate need for further Russian retaliation to the U.S. sanctions, a stance that reflected an apparent hope to limit further damage to ties with the West that have plummeted to their lowest point since the end of the Cold War.
"We must refrain from retaliatory steps for now," Putin said.
But Putin's spokesman, Dmitry Peskov, later said that Russia would retaliate to the latest U.S. sanctions.
"We will react every time. We responded to the first round of sanctions, and we will respond to those too," he said, according to the ITAR-Tass news agency. He did not elaborate.
OSCE observer mission
EU foreign ministers on Friday revealed that the OSCE has agreed to send a six-month observer mission to nine different locations throughout Ukraine. Crimea was not included in the list, but Donetsk — a city in a region considered by some to be a potential future target for Russian annexation — will be visited by observers.
The observation team will consist of 100 civilians.
German Foreign Minister Frank-Walter Steinmeier said the OSCE's decision to send a monitoring mission to Ukraine was a step towards deescalating the crisis in the country.
"This is not yet the end of the crisis but a step that helps to support our deescalation efforts," he said in a statement, shortly after the decision of the 57-nation rights and security group was announced.
"The situation in Ukraine remains unstable and menacing. For this reason, the (OSCE) observers must take up their work as quickly as possible," said Steinmeier.
Ukrainian soldiers in limbo
In Crimea, heavily armed Russian forces and pro-Russia militia have blocked Ukrainian military at their bases for weeks. Following Sunday's referendum they have moved aggressively to flush the Ukrainians out, storming some ships and military facilities.
The Ukrainian government said it was drawing up plans to extract its troops. At the Ukrainian military air base in Belbek, outside Sevastopol, Col. Yuly Mamchur told reporters Friday he was still waiting for orders from his commanders on whether to vacate.
Russia claimed some Ukrainian servicemen had already switched sides and agreed to join the Russian military. Friday had been the deadline for Ukrainian troops to leave Crimea, join the Russian military or demobilize.
Moscow also appeared to be warming to the deployment of monitors from the Organization for Security and Cooperation in Europe, the top trans-Atlantic security and rights group.
Foreign Minister Sergey Lavrov said that Russia would welcome sending the OSCE observers to Russian-speaking regions in eastern Ukraine on condition that their number and locations are clearly set, but he made it clear that they wouldn't be let into Crimea.
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